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UNITED STATES BANKRUPTCY COURT

DISTRICT OF NEW JERSEY
Caption in compliance with D.N.J. LBR 9004-2(c)
FOX ROTHSCHILD LLP
(Formed in the Commonwealth of Pennsylvania)
Michael J. Viscount, Jr., Esq.
John H. Strock, Esq.
1301 Atlantic Avenue, Suite 400
Atlantic City, NJ 08401
(609) 348-4515/fax (609) 348-6834
mviscount@foxrothschild.com
jstrock@foxrothschild.com
WHITE & CASE LLP
John K. Cunningham, Esq. (admitted pro hac vice)
Richard S. Kebrdle, Esq. (admitted pro hac vice)
Kevin M. McGill, Esq. (admitted pro hac vice)
Southeast Financial Center
200 South Biscayne Blvd., Suite 4900
Miami, FL 33131
(305) 371-2700/fax (305) 358-5744
jcunningham@whitecase.com
rkebrdle@whitecase.com
kmcgill@whitecase.com
Co-Counsel to the Debtors and
Debtors in Possession
In re:

Chapter 11

REVEL AC, INC., et al.,

Case No. 14-22654 (GMB)

Debtors.1

Jointly Administered
Proposed Objection Deadline: TBD
Proposed Hearing Date: TBD

DEBTORS EMERGENCY MOTION TO (I) INCREASE INTERIM AVAILABILITY

UNDER DIP FACILITY, (II) APPROVE A CORRESPONDING INCREASE IN NEW
MONEY COMMITMENTS AND (III) GRANT RELATED RELIEF

The Debtors in these chapter 11 cases, along with the last four digits of each debtors federal tax
identification number, are: Revel AC, Inc. (3856), Revel AC, LLC (4456), Revel Atlantic City, LLC (9513), Revel
Entertainment Group, LLC (2321), NB Acquisition, LLC (9387) and SI LLC (3856). The location of the Debtors
corporate headquarters is 500 Boardwalk, Atlantic City, New Jersey 08401.

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Revel AC, Inc. and its affiliated debtors and debtors in possession (collectively,
the Debtors) in the above-captioned chapter 11 cases (the Chapter 11 Cases) hereby file this
emergency motion (the Motion) pursuant to sections 361, 362 and 364 of title 11 of the United
States Code, 11 U.SC. 101, et seq. (the Bankruptcy Code), for entry of an order (the Sixth
Amended Interim DIP Order), substantially in the form the Debtors shall file in advance of the
hearing on the Motion, (i) increasing the interim availability under the Debtors DIP Facility (as
defined below),2 (ii) approving a corresponding increase in the new money commitments
under the DIP Facility and (iii) granting related relief. In support of the Motion, the Debtors
respectfully represent as follows:
BACKGROUND
A.

Chapter 11 Cases
1.

The Debtors own a state of the art gaming and resort facility unlike any

other in Atlantic City, New Jersey. The Debtors facility consists of 6.2 million square feet,
located on approximately 20 acres with 820 feet of boardwalk frontage, and features the tallest
building in Atlantic City, the Revel hotel, a sleek 47-story, 710-foot high tower. The Debtors
130,000 square foot casino featured 110 table games and approximately 2,300 slot machines.
2.

On June 19, 2014 (the Petition Date), each of the Debtors filed a

voluntary petition for relief under chapter 11 of the Bankruptcy Code, thereby commencing these
Chapter 11 Cases. The Debtors continue to manage their property as debtors in possession
pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in
the DIP Credit Agreement (as defined below).

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3.

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On July 2, 2014, the United States Trustee appointed the Official

Committee of Unsecured Creditors (the Creditors Committee). No trustee or examiner has

been requested or appointed in these Chapter 11 Cases as of the date hereof.
4.

Additional background facts on the Debtors, including an overview of the

Debtors business, information on the Debtors debt structure and information on the events
leading up to the Chapter 11 Cases are contained in the Declaration of Shaun Martin in Support
of First Day Motions and Applications [Docket No. 5].
B.

DIP Facility
5.

On June 19, 2014, the Debtors filed the Debtors Emergency Motion

Pursuant to Sections 361, 362, 363 and 364 of the Bankruptcy Code and Rule 4001 of the
Federal Rules of Bankruptcy Procedure for the Entry of Interim and Final Orders (A)
Authorizing the Debtors to (I) Obtain Postpetition Financing, (II) Grant Senior Priming Liens
and Superpriority Claims to Postpetition Lenders, (III) Use Cash Collateral, and (IV) Provide
Adequate Protection to Prepetition Secured Parties, and (B) Prescribing Form and Manner of
Notice of an Scheduling Hearings [Docket No. 16] (the DIP Motion). Contemporaneously
therewith, the Debtors filed the Declaration of Barak Klein in Support of DIP Motion [Docket
No. 29].
6.

Pursuant to the DIP Motion, the Debtors requested approval of a senior

secured priming superpriority revolving credit facility (the DIP Facility), with Wells Fargo
Bank, N.A. (Wells Fargo), as administrative agent and collateral agent (in such capacities,
respectively, the DIP Administrative Agent and DIP Collateral Agent, and collectively, the
DIP Agent), Wells Fargo Bank, N.A. as letter of credit issuer (in such capacity, the DIP
Issuing Bank) and Wells Fargo Principal Lending, LLC and such other lenders from time to

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time party thereto (the DIP Lenders), which provided for a maximum interim availability of
$23.5 million pursuant to a Debtor-in-Possession Credit Agreement attached as Exhibit A to
the Interim DIP Order entered July 30, 2014 [Docket No. 352] (as amended, supplemented or
otherwise modified through the date hereof, the DIP Credit Agreement).
7.

On June 20, 2014, the Court entered an Interim Order Pursuant to Sections

361, 362, 363, 364 and 507 of the Bankruptcy Code and Rule 4001 of the Federal Rules of
Bankruptcy Procedure (A) Authorizing the Debtors to (I) Obtain Postpetition Financing, (II)
Grant Senior Priming Liens and Superpriority Claims to Postpetition Lenders, (III) Use Cash
Collateral, and (IV) Provide Adequate Protection to Prepetition Secured Parties, and (B)
Prescribing Form and Manner of Notice of and Scheduling Final Hearing [Docket No. 49] (the
Interim DIP Order). The DIP Facility was approved on an interim basis pursuant to the
Interim DIP Order.
8.

On July 30, August 21, September 4, September 22 and October 27, 2014,

the Court entered the first, second, third, fourth and fifth amended Interim DIP Orders,
respectively (collectively, and together with the Interim DIP Order, the Interim DIP Orders),
each of which, among other things, made minor modifications to the DIP Facility, including to
increase the interim availability thereunder to $28.73 million, and continued the interim approval
of such facility.
C.

Tax Settlement and Need for Increased Availability

9.

Contemporaneously herewith, the Debtors have filed a motion (the

Settlement Motion) to approve that certain settlement agreement (the Settlement Agreement)
by and between the Debtors and the City of Atlantic City (Atlantic City) pursuant to
Bankruptcy Rule 9019. Pursuant to the Settlement Agreement, among other things, the Debtors

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have agreed to make, promptly following entry of an order approving the Settlement Agreement,
a payment to Atlantic City in the amount of $26 million (the Settlement Payment). Atlantic
City in turn, among other things, has agreed to compromise and settle its claims against the
Debtors on account of real property taxes for the 2014 tax year (the 2014 Tax Claims), and that
the Settlement Payment will constitute a full satisfaction of such claims.
10.

The Settlement Agreement reflects an over $5 million reduction of the

2014 Tax Claims, as well as the avoidance of an 18% interest rate and mandatory 6% redemption
penalty, substantially benefiting the Debtors estates. However, the Settlement Agreement is
contingent upon the Settlement Payment, and the Debtors do not have sufficient cash on hand or
availability under the DIP Facility to make such payment. They will only be able to do so if the
maximum availability under the DIP Facility, including the interim availability, as approved by
the Interim DIP Orders, is increased to make available to the Debtors sufficient funds for the
Settlement Payment. Therefore, and subject to the entry of an order approving the Settlement
Agreement, the Debtors now request an increase in the borrowing availability under the DIP
Facility, including the interim availability, to enable the Debtors to consummate the Settlement
Agreement.
11.

Furthermore, as a result of recent developments in these cases relating to

the sale process, the hearing on final approval of the DIP Facility has been continued to January
8, 2015. In addition to the funding needed to consummate the Settlement Agreement, the
Debtors require additional liquidity to fund operations to the January 8th final hearing date.
Accordingly, the requested increase in interim borrowing availability of $21.0 million is
comprised of (i) $19.0 million, which when combined with $7.0 million of cash on hand will
fund the $26.0 million Settlement Payment, plus (ii) an additional $2.0 million that will be

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available to pay anticipated operating and other expenses between now and January 8th (subject
to the Approved Budget).
12.

The amount borrowed under the DIP Facility to make the Settlement

Payment (such amount, the Tax Borrowing) will constitute a new money borrowing under
the DIP Facility in the amount of $19.0 million. However, pursuant to the DIP Credit
Agreement, (x) $13.0 million of the Tax Borrowing drawn from the increased availability plus
interest will prime , with the exception of a portion of the JPM Roll-Up Borrowings in an
amount to be set forth in the Sixth Amended Interim DIP Order (plus interest, together with any
fees and costs then due with respect thereof), all other obligations (including, without limitation,
all other new money obligations and the remaining JPM Roll-Up Borrowings) under the DIP
Facility, and (y) the remaining $6.0 million of the Tax Borrowing (plus interest) will rank
equally with all other new money obligations under the DIP Facility. Unlike other new
money borrowings under the DIP Facility, however, the initial $13.0 million priming portion
of the Tax Borrowing drawn from the increased availability under the DIP Facility requested by
this Motion will not trigger any roll-up of the outstanding obligations under the prepetition
Tranche A-1 or A-2 Revolving Credit Facilities.
13.

Finally, Atlantic City has informed the Debtors that, for budgetary

reasons, it is critical that they receive the Settlement Payment before year end. Accordingly,
because the timing of the Debtors requested relief is critical, the Debtors have filed concurrently
herewith a motion to shorten the required notice period and hear this Motion and the Settlement
Motion on an expedited basis.

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Jurisdiction
14.

This Court has jurisdiction to consider this matter pursuant to 28 U.S.C.

157 and 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper
before this Court pursuant to 28 U.S.C. 1408 and 1409.
Relief Requested
15.

By this Motion, pursuant to sections 361, 362 and 364 of the Bankruptcy

Code, the Debtors respectfully request entry of the Sixth Amended Interim DIP Order,
substantially in the form the Debtors shall file in advance of the hearing on the Motion,
(i) increasing the availability under the Debtors DIP Facility, including on an interim basis,
(ii) approving a corresponding increase in the amount of new money commitments under the
DIP Facility and (iii) authorizing corresponding modifications to the DIP Credit Agreement, in
each case as set forth in Exhibit A hereto.
Basis for Relief
16.

Section 364 of the Bankruptcy Code gives bankruptcy courts the power to

authorize postpetition financing for a chapter 11 debtor in possession. See In re Defender Drug
Stores, Inc., 126 B.R. 76, 81 (Bankr. D. Ariz. 1991), affd, 145 B.R. 312 (B.A.P. 9th Cir. 1992).
Section 364 of the Bankruptcy Code provides in pertinent part that:
(c)
If the [debtor in possession] is unable to obtain
unsecured credit allowable under section 503(b)(1) of this title as
an administrative expense, the court, after notice and a hearing,
may authorize the obtaining of credit or the incurring of debt
(1)
with priority over any or all administrative
expenses of the kind specified in section 503(b) or 507(b)
of this title;
(2)
secured by a lien on property of the estate
that is not otherwise subject to a lien; or

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(3)
secured by a junior lien on property of the
estate that is subject to a lien.
(d)(1) The court, after notice and a hearing, may authorize
the obtaining of credit or the incurring of debt secured by a senior
or equal lien on property of the estate that is subject to a lien only
if
(A)
the [debtor in possession] is unable to obtain
such credit otherwise; and
(B)
there is adequate protection of the interest of
the holder of the lien on the property of the estate on which
such senior or equal lien is proposed to be granted.
11 U.S.C. 364(c)-(d)(1).
17.

Generally, courts apply a three-part test to determine whether a debtor in

possession may obtain credit under section 364 of the Bankruptcy Code. Under such test, a
debtor may incur postpetition financing if it demonstrates that (a) it cannot obtain credit
unencumbered or without superpriority status, (b) the postpetition financing is necessary to
preserve the assets of the estates, and (c) the terms of the postpetition financing is fair,
reasonable and adequate given the circumstances of the debtor and the proposed lenders. See In
re Crouse Grp., Inc., 71 B.R. 544, 549-50 (Bankr. E.D. Pa. 1987); see also In re Aqua Assocs.,
123 B.R. 192, 195-96 (Bankr. E.D. Pa. 1991).
18.

This Court has already determined that the DIP Facility satisfies the

requirements of Section 364 of the Bankruptcy Code on an interim basis, as reflected by the prior
approval of the DIP Facility by the Interim DIP Orders. The sole relief requested by this Motion
is an increase of the borrowing availability and commitments under the existing DIP Facility,
together with certain corresponding modifications to the DIP Credit Agreement, among other
things, to address the priority of the proposed borrowings under such additional availability and
to extend out certain relevant milestone dates under the DIP Credit Agreement.
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19.

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As set forth in greater detail in the Settlement Motion, the Settlement

Agreement will reduce the Debtors property tax liability by more than $5 million and eliminate
potentially material litigation cost. The DIP Facility represents the sole source of financing
available to the Debtors in these Chapter 11 Cases and, here, the Debtors seek an increase in the
maximum availability under the DIP Facility in order to be able to effect a settlement that
preserves the assets of the estates, as well as to allow them to continue operating pending the
final hearing to approve the DIP Facility scheduled for January 8, 2015, and it is therefore in the
best interest of all of the Debtors creditors and stakeholders. Accordingly, subject to the entry
of an order approving the Settlement Agreement, the Debtors respectfully submit that the Sixth
Amended Interim DIP Order should be approved.
Notice
20.

Notice of this Motion has been provided to the (i) Office of the United

States Trustee for the District of New Jersey, (ii) counsel to the Prepetition First Lien Lenders,
(iii) counsel to the Prepetition Second Lien Lenders, (iv) counsel to the DIP Agent, (v) counsel to
the Creditors Committee, (vi) all parties requesting notices pursuant to Bankruptcy Rule 2002,
(vii) the Office of the Attorney General for the State of New Jersey, (viii) the DGE, (ix) the New
Jersey Casino Control Commission, (x) the Office of the Governor for the State of New Jersey,
(xi) the United States Attorneys Office for the District of New Jersey, (xii) the United States
Attorney General, (xiii) the Internal Revenue Service, (xiv) the Securities and Exchange
Commission and (xvi) counsel to Polo North. The Debtors submit that no other or further notice
need be provided.
21.

No previous motion for the relief sought herein has been made to this or

any other court.

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WHEREFORE, the Debtors respectfully request entry of the Sixth Amended

Interim DIP Order granting (i) the relief requested herein and (ii) such other and further relief as
the Court deems just and proper.
Dated: December 24, 2014
Atlantic City, New Jersey
FOX ROTHSCHILD LLP
By: /s/ Michael J. Viscount, Jr.
Michael J. Viscount, Jr., Esq.
John H. Strock, Esq.
1301 Atlantic Avenue, Suite 400
Atlantic City, NJ 08401
(609) 348-4515/fax (609) 348-6834
mviscount@foxrothschild.com
jstrock@foxrothschild.com
and
John K. Cunningham, Esq.
(admitted pro hac vice)
Richard S. Kebrdle, Esq.
(admitted pro hac vice)
Kevin M. McGill, Esq.
(admitted pro hac vice)
WHITE & CASE LLP
Southeast Financial Center
200 South Biscayne Boulevard, Suite 4900
Miami, Florida 33131
(305) 371-2700/fax (305) 358-5744
jcunningham@whitecase.com
rkebrdle@whitecase.com
kmcgill@whitecase.com
Co-Counsel to the Debtors and Debtors in
Possession

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